The Big Picture – Is G20 Summit an Exercise in Futility?

Archives

Is G20 Summit an Exercise in Futility?

TOPIC: General Studies 2

• Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
• Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
• Important International institutions, agencies and fora- their structure, mandate.

Background

G20 represents 85% of global GDP, 80% of international trade, 65% of world’s population.

G20 was formed post the economic crisis of 2008. The leaders of 20 most important nations have come together where they have been able to understand the nature of economic crisis and decide how a collective stimulus can help in increasing spending power. The 11^th G20 summit had been conducted on lines of improving global conditions. It is not easy to quantify exactly what happened but G20 has lot of work at the sidelines where heads of state are meeting each other.

Is it truly a multilateral summit?

In every major multilateral summit, a large component will be about the bilateral meetings and discussion on domestic issues. The core of a successful summit is that once all bilateral meets are over, the leaders have to put together some degree of coherent convergent opinion about what to do. The G20 summit of Pittsburgh (2009) was the best example of that where comprehensive agreements were made on solving global financial crisis.

However, as the case has been of past few G20s, even this G20 did not see any real coherent proposal or agreement among the countries. The core divide by China and backed by India said that the developed world, especially the western countries, have lack of structural reforms and emphasis is on quantitative easing which is eventually printing more money in order to get the economy get going, is not proving to be much success.

The growth is little, but the enormous amount of money printing has now started to damage the world economy. One third of all the savings of world today is getting negative interest rate because so much money has been printed that no one is ready to give interest on that money any more.

India has done more structural reforms than any other nations and thus has forcefully conveyed that it is doing the hard political work to actually change the economy to compensate for the problems of world economy and the western countries are just printing more money. This is a disaster which can lead to another financial crisis.

The failure to come to an agreement between these bipolar thinking at the G20 is a clear sign that G20 at least in this summit has failed to accomplish its primary goal.

Current economic challenges

G20 started in 1999 in wake of crisis when the finance ministers and central bank governors got together on the sidelines of fund bank meetings which sought to look after how the global economic governance and financial structure can be improved. Both in 1999 and 2008, there were international economic crisis and hence there was action.

At the moment, there is evidence of Brexit, rise of isolationism, rise of protectionism in different countries, but the crisis is not of the magnitude as seen earlier. However, this has seen pressure on China to open its market, there has been pressure on other countries to do away with financial profligacy and to keep on accumulating debts.

Is it only a platform to discuss economic issues?

The agenda of G20 has become very heavy where everyone wants to individually raise their concern. Thus, it is no longer related only to trade, investment and finance. Now there are talks on agriculture, education, health, water and all other important issues.

Of course, no big bang or visionary decisions to resolve the pressing issues have been visible in last few years, but one of the yardstick would be that when the decisions are taken, how well are they complied with. A study by University of Toronto says that from Antalya summit in November 2015 till Hangzhou summit in September 2016, average compliance level for all commitments made was 78%. The highest was by USA and UK with 88%. India, Italy and Germany with 85%. This presents a positive picture of upkeep of such important institution.

India and G20

G20 is important to India as it allows access to international fora. The G20 structure also reflects the change in global architecture. It provides countries like India to deal with different powers, reach out and convince them on important matters. When PM reached out to G20 on terror, the endeavour was to use the network built in reaching out to all the countries that there is a global problem which needs to be sorted out. India also talked about squeezing out black money and coordinated efforts for economic growth.

Importance of G20

G20 is the only forum globally which has developed and developing countries together. Though its genesis lies in economic crisis, over the years it had not limited itself to that.

There is no secretariat system, there is no treaty structure or no military issues that are discussed multilaterally like done at NATO or UN meetings. However, this has never stopped countries to discuss it bilaterally, for example, there was a meet between Putin and Obama on Syrian crisis. The platform gives way forward to crucial decisions like USA and China pledging to ratify the Paris convention. The strength of G20 lies in the fact that heads of member countries, invited countries and many international organisations inevitably attend it. Thus, there is a network of 20 leaders who have a platform to share and discuss common issues and hence, it is still a relevant platform.

Connecting the dots:

• What is mandate of G20? How does it help India to achieve its bilateral objectives? Discuss.

Related articles:

11th G-20 Summit-Towards revival of world economy